Page 137 - SBL Integrated Workbook STUDENT 2018

Reporting to stakeholders

Institutional investors

1.1 Institutional Investors

Institutional investors manage funds invested by individuals.

In the UK there are four types of institutional investor:

 pension funds

 life assurance companies

 unit trust

 investment trusts.

Importance of institutional investors

 the increasing dominance of this investor class and its positive contribution to
governance by concentrating power in a few hands.

 fund managers and other professionals working for the institutions have the
skills and expertise to contribute towards the direction and management of a
company.

Potential problems

The separation between ownership and control creates a complex web of agency
relationships – for example:

 investor

 pension fund trustee

 pension fund manager

 company.

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